Significant tightening of tax rules on fiduciary asset management
Significant tightening of tax rules on fiduciary asset management
On March 11, the National Tax and Customs Administration (NAV) published the 2025/2 tax issue ("Personal income tax liability after the assignment of a dividend claim to fiduciary asset management") on its website. The tax issue was issued by NAV and the Ministry of National Economy and is intended to decide a serious question of legal interpretation regarding dividend claims transferred into fiduciary asset management. According to this, if an individual settlor assigns a dividend claim into fiduciary asset management, it results in a tax liability, and the favorable tax rules applicable to fiduciary asset management may not be applied.
The tax advantage of fiduciary asset management
Fiduciary asset management, as a specific legal institution, was implemented into the rules of Hungarian civil law by Act V of 2013 on the Civil Code (Ptk.) in 2014. In essence, the settlor (whether an individual or a legal entity) enters into a contract with a third party (the trustee) for the management of the settlor's assets, rights, and claims for the benefit of one or more persons designated by the settlor (the beneficiary or beneficiaries).
Fiduciary asset management has become one of the most important tools of family wealth planning in recent years, with numerous fiduciary structures created in which settlors (most often individuals) transferred the ownership of some of their assets to natural or legal persons acting as trustees. The institution of fiduciary asset management can be regarded as a hybrid of asset transfer agreements and wills.
The range of assets that can be transferred into asset management is extremely wide: essentially anything can be transferred into fiduciary asset management, from business shares (quotas; shares) to real estate and securities. Items such as jewelry, paintings, cash, and vehicles can also be subject to asset management. In addition – under the rules of the Civil Code – claims can also be transferred into fiduciary asset management.
The popularity of fiduciary asset management is largely due to its tax advantage: for individual settlors, the transfer of assets can be implemented tax-free (exempt from personal income tax and social contribution tax).
Many individuals took advantage of this tax benefit when they transferred their dividend claims into fiduciary asset management.
This is because, under normal circumstances, the receipt of dividend income or the disposal of the claim to dividends results in personal income tax (PIT) and social contribution tax (SCT) liabilities for the individual entitled to it.
According to the previous understanding, however, when a dividend claim was assigned into fiduciary asset management, no tax liability arose for the individual, based on the permissive rule of the Personal Income Tax Act (Szja tv.).
The interpretation by the tax authority: assignment of dividend claims creates a tax obligation
In the 2025/2 tax issue (the “Tax Issue”), NAV outlined a completely new direction of legal interpretation regarding the assignment of dividend claims into fiduciary asset management.
According to the Szja tv., in the event that an individual makes a decision regarding a dividend to which they are entitled (disposes of it), this moment is considered the acquisition of income under §9 of the Szja tv. In case of income acquisition, tax must be paid. This rule is intended to address the situation in which the individual does not yet possess the actual item (in this case, the dividend amount), but already has the right to dispose of it (in this case, the company paying the dividend has already approved it upon acceptance of the financial statements) and actually disposes of it, thereby triggering the tax obligation, even though no actual cash flow has occurred in their favor yet.
Therefore, if the individual, for example, assigns or transfers their dividend claim into fiduciary asset management, this will normally result in a tax liability for them.
However, the Szja tv. includes a permissive rule for fiduciary asset management: namely, according to the second clause of §9 (3) of the Szja tv., entering into a fiduciary asset management contract is not considered as the exercise of the right of disposal for the individual settlor.
Until now, taxpayers and tax advisors interpreted this clause to mean that the assignment of a dividend claim into fiduciary asset management by an individual does not create a tax obligation, since the assignment of the dividend claim (right) was considered to fall within the concept of exercising the right of disposal. Accordingly, the common practice was that in the case of the assignment of a dividend claim, the individual did not pay any taxes to the state budget.
It is precisely this interpretation that NAV overturned in the Tax Issue.
According to the Tax Issue, §9 (3) of the Szja tv. must be interpreted – in line with the related commentary of the Szja tv. – to apply only to future yields from dividends (dividend claims) that are already in fiduciary asset management.
This means that the assignment of the dividend claim itself by the individual settlor results (resulted) in a tax liability, as the application of §9 of the Szja tv. is excluded in this case.
The applicable tax burden in this case: 15% PIT and 13% SCT (with an upper limit) on the approved (but not yet paid) dividend (dividend claim). That is, tax must (should have been) paid even if the individual did not receive any money, and in fact cannot receive it, since the dividend claim already belongs to the managed assets, and any payment of dividends is made to the trustee’s bank account. Dividends can also be paid in kind (e.g., with real estate).
Possible steps
It must be highlighted that the interpretation provided in the Tax Issue does not have binding force and does not carry the legal effect of a law (such as the provisions of the Szja tv.). Nevertheless, it should not be ignored, as it clearly represents the NAV’s legal interpretation of the subject.
It is a crucial consideration that, according to the recently published 2025 audit plan of NAV, fiduciary asset management structures will be a focus area this year. According to the published audit plan, the examination of certain parties involved in fiduciary asset management relationships has become necessary, particularly to prevent the circumvention of the provisions in tax laws. This means that NAV will pay special attention in 2025 to reviewing the tax advantages used in fiduciary asset management, especially in the area of dividend claims.
Accordingly, during future audits of fiduciary asset management relationships, NAV will thoroughly examine the nature of the assets transferred into management, and if it identifies that dividend claims were also transferred, it will assess whether the tax obligations at the time of the transfer were fulfilled in line with the Tax Issue. If the individual settlor did not pay tax upon the transfer of the claim (and most likely, these individuals are the majority), NAV may establish a tax shortfall (PIT and SCT), which must be paid retroactively, and it may also impose a tax fine. Naturally, late payment interest will also be charged on the tax shortfall.
For those individuals who interpreted (interpret) §9 of the Szja tv. in such a way that the favorable rule contained therein is also applicable to the assignment of dividend claims, and who transferred their claim to dividends to the trustee, the following options are available.
If they believe that the literal interpretation of §9 of the Szja tv. does not exclude the favorable rules for the assignment of claims, including dividend claims, then they do not need to take specific action. In the event of a confrontation with the tax authority, they may defend their position in court during a tax litigation procedure.
However, if they assess that a tax audit could carry significant risks in relation to the potential tax shortfall, then only one route remains open to them: they must correct their tax obligations through self-audit, and declare and pay the undeclared and unpaid tax. It is advisable to request the reduction or waiver of the self-audit interest, given that the failure to fulfill the tax obligation was caused by the misinterpretation of the law.
It is expected that the legislator will amend the Szja tv. to clarify the applicable rules, as in its current form it unfortunately does not align with the legal interpretation expressed in the Tax Issue.